A news release said the extension of the Money Market Funds Guarantee Program (see “Treasury Opens Guarantee Program for Money Funds“) from its originally scheduled expiration of April 30 to September 18, 2009 was being carried out “in order to support ongoing stability in financial markets.”
As a result, according to the Treasury announcement, the program will continue to provide coverage to shareholders up to the amount held in participating money market funds as of the close of business on September 19, 2008.
Officials said all money market funds that currently participate in the program and meet the extension requirements under the Guarantee Agreements are eligible to continue to participate in the program. Funds that are not currently participating in the program are not eligible to participate.
According to the announcement, funds are required to submit a program extension payment, an extension notice and an updated Annex A by April 13, 2009, and a Bring-Down Notice by May 11, 2009. The amount of the payment for the extension period will be based on a fund’s net asset value as of September 19, 2008, officials said.
For funds that had a market-based net asset value greater than or equal to 99.75% of their stable share price, the payment will be 0.015%, or 1.5 basis points, multiplied by the number of shares outstanding on September 19, 2008. For funds that had a market-based net asset value less than 99.75% of their stable share price but greater than or equal to 99.50% of their stable share price, the payment will be 0.023%, or 2.3 basis points, multiplied by the number of shares outstanding on September 19, 2008.
The department said the program extension payment amounts, when combined with prior payment amounts, equate to 4 or 6 basis points (on an annualized basis) of the fund’s asset base over the entire extended program term.
The program currently covers more than $3 trillion of combined fund assets, the Treasury Department said.
More information is available here.